Appraisal idiotic, should I bother to appeal?

Fair value is what someone will pay for it down the line, not what some appraisal that they will never see says.

You seem to have what you need, so why does it matter. Just move on and be happy you got such a good deal.

True that, no point appealing this appraisal. But if a future appraiser does the same thing, a buyer may not be able to get the full financing he may need.

More to add to the calculation:

The sales comparables he used were: ($ per sq ft.) $818, $771, $870, $900, $915.

Where does he come off saying mine is worth $715 when most of those other ones have horrible layouts with 2 windows total, and facing the back of other buildings?

Your getting over emotional over something that you cant really change or doesnt really affect you.
Appraisals are the biggest joke in the industry.
99% of the time it is within 5% of what someone pays. If you paid $800 it would ahave been appraised between $790 and $840.
They have the answer before the test.

>But I'm worried that if all appraisers do such a shaft job, I'll have problems unloading at a fair value in the future

Not if you keep the appraisal to yourself. Your new buyer will have a new contract price that their appraiser will work backwards from and magically appraise it the same number.

truthskr10,

I knew it. So appraisers really do go backwards from the sales price. I asked the bank if they do that and they said "no. " Appraiser was trying to cover his ass. He didn't want to appraise for hundreds of thousands more than the sale price in case the bank were ever to sue him for overvaluing.

If your buyer pays all cash which may be very well be the case will he be using an appraiser?

It's the common suspicion by most of which is quite obvious.
And you were expecting a pat on the back from the great buying job you did and didnt get it from the apppraiser.
You shouldnt care about this. Just enjoy it and start worrying about furniture :)

appraiser is there to justify the price to the bank. they try to do the least. if you would've paid $900 psf, they would adjust for renovated kitchen, better view, etc.

renterjoey,

I thought all cash buyers were white whales - you've heard about them, but have never seen one.

truthskr10,

I honestly was. After doing all these comps and telling anyone who'd listen what a good deal this was, I was seeking validation.

I think the appraisal is a joke. When I have bought properties, the appraisals came in as either exactly what I paid, or a few K more. When I got a refi, the appraisal came in at a price I would love to sell at.

I think the bank just wants someone to check out the unit to make sure things look as they should and there isn't fraud going on. When the bank does an appraisal for a refi, I think they want to show the lowest debt to equity ratio possible.

If an appraisal comes back as lower than contract price...I would be concerned.

I generally agree with UES10021 & truthskr10.

From what I have seen, appraisers frequently try to appraise exactly at the contracted sale price. I once bought from a distressed seller @ a huge discount, and I had to laugh when the appraisal came back exactly at that price. Although comps were included in the appraisal, it was as though the appraiser only looked at the sale price in generating the final figure.

JWL cash buyers are out there and don't be shocked when you put your apt up for sale that you will ge an all cash offer.

I just sold a small apartment at 205 Third Avenue, a 1960's white brick in Gramercy that has a lot of small apartments.

Yesterday an appraiser who was working on a subsequent deal called me. He had our listing photos and our closing price, but he still had specific questions: ""why had we gotten such a high price per square foot? when had the kitchen been renovated? what was the south view like? How did the size of the alcove affect the price?"

Bottom line, we talked for about ten minutes about the applicability of my comp to his current deal, and about other comps in the building.

Some appraisers are awful, but they don't all suck.

ali r.
DG Neary Realty

Perhaps the appraiser was doing you a favor. If this is a short sale, the bank would be more likely to approve the short sale if the appraisal came back lower than what you are willing to pay. Be careful what you wish for.

apt23,

Good point, although appraiser didn't know it was a short sale. Also, everyone gets paid in full with the sale price, so not fully a short sale. It's a distressed sale.

Oh yeah. And I just noticed on the report:

All the comp units are smaller than mine. He gave me credit of $400 per sq ft for the comp. $400!!!!!! His fair market value for my apt was $715! This guy doesn't know his face from his ass.

on, he doesn't know that 2 + 2 = 4. he thinks it's 3

>""why had we gotten such a high price per square foot? when had the kitchen been renovated? what was the south view like? How did the size of the alcove affect the price?"

Ali, if your repsonse was, "purchaser is a columbian drug lord looking to wash money and I'm his niece and wanted to cover a 25% commission," he'd still put 7 fingers in a glove.

All appraisers may not suck but the overall system of it does. It's generally dysfunctional and serves as UES10021 describes, to basically make sure things look as they should and there is no hardcore fraud going on.

I personally think that the appraisal should come in as the purchase price. That is what the apartment is worth after all, at least on the day the contracts are signed.

UES10021,

Not if it's severely overvalued or undervalued. If someone won the lottery and wanted to buy back their childhood home for $10mm, that doesn't mean its real value should be $10mm. The point of the appraisal is for the bank to see if their collateral is being fairly priced, should they have to sell it in a foreclosure.

I've mentioned before that the appraisal when I bought my unit (also a distress sale) compared measured square footage to stated square footage. Thus, my one bedroom + den apartment, which is bigger than many two bedrooms, was compared to junior one bedrooms. The appraiser used interior wall to interior wall square footage for my unit, estimated to be 760. (Using exterior wall to exterior wall calculations, my co-op says my unit is 920 square feet.) One of the comps, which received no square footage adjustment, was lucky if it was 550 square feet in reality. The broker wrote on Streeteasy that the listing was 750 square feet, and that's what the appraiser used -- apparently without ever looking at the floorplan and seeing it was miniscule. In the end, it did not hurt us. The unit appraised for what we paid, even though the comps were all significantly "off."

We're in the midst of refinancing now, and we had the appraisal done when were 95% through with construction. Our LTV is 50% or less, and there's no "permanent record" where appraisals are stored. If we take a $100k-$200k hit on the appraisal because our apartment didn't show well at the time the appraiser visited, no big deal.

lad,

This guy's doing exactly the same thing. He took a measurement of our sq footage vs. the stated/official sq footage of the other comps.

On my previous apt though, I got screwed by an appraiser during a refi. He said my apt was worth 640k in Jan 2011. I recently tried to sell it and got an offer of 690k and a few 680k and 670k. The Streeteasy comps all priced my home in the 675k price range.

I had to put up 30k more cash to pay down the loan to get the refi done.

I mean Jan 2012.

They are notorious....just one of those things in life, they have no incentive to increase there exposure to getting it wrong. It is almost humorous how conservative they are.

My funniest example was one apartment of mine had a lovely terrace, I was doing my best smile, doing a price in right wave of my arm along the terrace, and asked what does this terrace add to the price of my apartment?

He said "lady you have a great amenity" I thanked him and asked what "my great amenity added to the apartment". He said an amenity doesn't add financial value to the appraisal, however it means when I put "great amenity in the appraisal, that your apartment would sell over the same apartment without the "great amenity", so it is a positive".

"good to know good to know that an apartment with a south facing, set back 66 ft terrace in a park block in the 70's, will probably sell before the same apartment without the terrace." That is what happened with 2 of the biggest NYC appraisal firms, even after my broker had sent thru a list of comps with outdoor space and spoken to the managing director/ owner of the company.

Bottom line, don't worry, lucky the real market knows market price, more than the professionals, as 6 people made offers at least $800,000 over the "valuation " in one week after the valuation in a bad market.

JW, think about why are you getting this 'deal'. nobody else out there buying? unless you have an inside deal with the seller tough to imagine apartment is worth what you think it is. maybe you got played how great a deal it is?

Jbutton,

I don't think so unless there is something I don't know about the individual unit. The same line/layout 3 floors lower is asking $1050 per sq ft. Nicer inside condition but not that much nicer.

Why not use it to negotiate a lower price ??